U.S. fed funds futures raise odds of rate hike in early 2023 after Fed statement

Futures on the federal funds rate, which track short-term interest rate expectations, on Wednesday raised bets that the U.S. Federal Reserve will tighten monetary policy in early 2023 after Fed projections showed at least two rate increases that year.

The fed funds market showed a roughly 90% chance of a rate hike by January 2023. Prior to the Fed statement, the market fully priced in a rate increase by April 2023.

New projections saw 11 Fed officials, a majority, pencil in at least two quarter-point interest rate increases for 2023, even as officials in their statement pledged to keep policy supportive for now to encourage an ongoing jobs recovery.

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